IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp11576.html
   My bibliography  Save this paper

Child Care, Parental Labor Supply and Tax Revenue

Author

Listed:
  • Andresen, Martin Eckhoff

    (University of Oslo)

  • Havnes, Tarjei

    (Norwegian Ministry of Finance)

Abstract

We study the impact of child care for toddlers on the labor supply of mothers and fathers in Norway. For identification, we exploit the staggered expansion across municipalities following a large reform from 2002. Our IV-estimates indicate that child care use causes an increase in the labor supply of mothers. Results suggest that cohabiting mothers move towards full time employment, while single mothers move to part time. Meanwhile, we find no impact for fathers or grandparents. We also find an increase in the taxes paid from cohabiting mothers, lending some support to the argument that parts of the cost of child care is offset by increased taxes.

Suggested Citation

  • Andresen, Martin Eckhoff & Havnes, Tarjei, 2018. "Child Care, Parental Labor Supply and Tax Revenue," IZA Discussion Papers 11576, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11576
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp11576.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jonah B. Gelbach, 2002. "Public Schooling for Young Children and Maternal Labor Supply," American Economic Review, American Economic Association, vol. 92(1), pages 307-322, March.
    2. Goux, Dominique & Maurin, Eric, 2010. "Public school availability for two-year olds and mothers' labour supply," Labour Economics, Elsevier, vol. 17(6), pages 951-962, December.
    3. Maria Donovan Fitzpatrick, 2012. "Revising Our Thinking About the Relationship Between Maternal Labor Supply and Preschool," Journal of Human Resources, University of Wisconsin Press, vol. 47(3), pages 583-612.
    4. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    5. Maria Donovan Fitzpatrick, 2010. "Preschoolers Enrolled and Mothers at Work? The Effects of Universal Prekindergarten," Journal of Labor Economics, University of Chicago Press, vol. 28(1), pages 51-85, January.
    6. Felfe, Christina & Lechner, Michael & Thiemann, Petra, 2016. "After-school care and parents' labor supply," Labour Economics, Elsevier, vol. 42(C), pages 64-75.
    7. Bettendorf, Leon J.H. & Jongen, Egbert L.W. & Muller, Paul, 2015. "Childcare subsidies and labour supply — Evidence from a large Dutch reform," Labour Economics, Elsevier, vol. 36(C), pages 112-123.
    8. Michael J. Kottelenberg & Steven F. Lehrer, 2017. "Targeted or Universal Coverage? Assessing Heterogeneity in the Effects of Universal Child Care," Journal of Labor Economics, University of Chicago Press, vol. 35(3), pages 609-653.
    9. Henning Finseraas & Inés Hardoy & Pål Schøne, 2017. "School enrolment and mothers’ labor supply: evidence from a regression discontinuity approach," Review of Economics of the Household, Springer, vol. 15(2), pages 621-638, June.
    10. Bauernschuster, Stefan & Schlotter, Martin, 2015. "Public child care and mothers' labor supply—Evidence from two quasi-experiments," Journal of Public Economics, Elsevier, vol. 123(C), pages 1-16.
    11. Givord, Pauline & Marbot, Claire, 2015. "Does the cost of child care affect female labor market participation? An evaluation of a French reform of childcare subsidies," Labour Economics, Elsevier, vol. 36(C), pages 99-111.
    12. Carta, Francesca & Rizzica, Lucia, 2018. "Early kindergarten, maternal labor supply and children's outcomes: Evidence from Italy," Journal of Public Economics, Elsevier, vol. 158(C), pages 79-102.
    13. Pierre Lefebvre & Philip Merrigan, 2008. "Family Background, Family Income, Cognitive Tests Scores, Behavioural Scales and their Relationship with Post-secondary Education Participation: Evidence from the NLSCY," Cahiers de recherche 0830, CIRPEE.
    14. Lundin, Daniela & Mörk, Eva & Öckert, Björn, 2008. "How far can reduced childcare prices push female labour supply?," Labour Economics, Elsevier, vol. 15(4), pages 647-659, August.
    15. Michael J. Kottelenberg & Steven F. Lehrer, 2013. "New Evidence on the Impacts of Access to and Attending Universal Child-Care in Canada," Canadian Public Policy, University of Toronto Press, vol. 39(2), pages 263-286, June.
    16. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    17. Michael Baker & Jonathan Gruber & Kevin Milligan, 2008. "Universal Child Care, Maternal Labor Supply, and Family Well-Being," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 709-745, August.
    18. Havnes, Tarjei & Mogstad, Magne, 2011. "Money for nothing? Universal child care and maternal employment," Journal of Public Economics, Elsevier, vol. 95(11), pages 1455-1465.
    19. Haeck, Catherine & Lefebvre, Pierre & Merrigan, Philip, 2015. "Canadian evidence on ten years of universal preschool policies: The good and the bad," Labour Economics, Elsevier, vol. 36(C), pages 137-157.
    20. Lee, Young Wook, 2016. "Effects of a Universal Childcare Subsidy on Mothers' Time Allocation," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 38(1), pages 1-22.
    21. Elizabeth U. Cascio, 2009. "Maternal Labor Supply and the Introduction of Kindergartens into American Public Schools," Journal of Human Resources, University of Wisconsin Press, vol. 44(1).
    22. Michael Baker & Jonathan Gruber & Kevin Milligan, 2015. "Non-Cognitive Deficits and Young Adult Outcomes: The Long-Run Impacts of a Universal Child Care Program," NBER Working Papers 21571, National Bureau of Economic Research, Inc.
    23. Nollenberger, Natalia & Rodríguez-Planas, Núria, 2015. "Full-time universal childcare in a context of low maternal employment: Quasi-experimental evidence from Spain," Labour Economics, Elsevier, vol. 36(C), pages 124-136.
    24. Barua, Rashmi, 2014. "Intertemporal substitution in maternal labor supply: Evidence using state school entrance age laws," Labour Economics, Elsevier, vol. 31(C), pages 129-140.
    25. Pierre Lefebvre & Philip Merrigan, 2008. "Child-Care Policy and the Labor Supply of Mothers with Young Children: A Natural Experiment from Canada," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 519-548, July.
    26. Blau, David & Currie, Janet, 2006. "Pre-School, Day Care, and After-School Care: Who's Minding the Kids?," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 2, chapter 20, pages 1163-1278, Elsevier.
    27. Angrist, Joshua D., 2014. "The perils of peer effects," Labour Economics, Elsevier, vol. 30(C), pages 98-108.
    28. Lefebvre, Pierre & Merrigan, Philip & Verstraete, Matthieu, 2009. "Dynamic labour supply effects of childcare subsidies: Evidence from a Canadian natural experiment on low-fee universal child care," Labour Economics, Elsevier, vol. 16(5), pages 490-502, October.
    29. Sergio Correia, 2014. "REGHDFE: Stata module to perform linear or instrumental-variable regression absorbing any number of high-dimensional fixed effects," Statistical Software Components S457874, Boston College Department of Economics, revised 21 Aug 2023.
    30. Yusuf Emre Akgunduz & Janneke Plantenga, 2018. "Child Care Prices And Maternal Employment: A Meta†Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 118-133, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huebener, Mathias & Pape, Astrid & Spiess, C. Katharina, 2020. "Parental labour supply responses to the abolition of day care fees," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 510-543.
    2. Yamaguchi, Shintaro & Asai, Yukiko & Kambayashi, Ryo, 2018. "Effects of subsidized childcare on mothers’ labor supply under a rationing mechanism," Labour Economics, Elsevier, vol. 55(C), pages 1-17.
    3. Bettendorf, Leon J.H. & Jongen, Egbert L.W. & Muller, Paul, 2015. "Childcare subsidies and labour supply — Evidence from a large Dutch reform," Labour Economics, Elsevier, vol. 36(C), pages 112-123.
    4. Eric Schuss & Mohammed Azaouagh, 2021. "Combining parenthood and work: transmission channels and heterogeneous returns to early public childcare," Review of Economics of the Household, Springer, vol. 19(3), pages 641-676, September.
    5. Müller, Kai-Uwe & Wrohlich, Katharina, 2020. "Does subsidized care for toddlers increase maternal labor supply? Evidence from a large-scale expansion of early childcare," Labour Economics, Elsevier, vol. 62(C).
    6. Brewer, Mike & Cattan, Sarah & Crawford, Claire & Rabe, Birgitta, 2022. "Does more free childcare help parents work more?," Labour Economics, Elsevier, vol. 74(C).
    7. BOUSSELIN Audrey, 2019. "Expanding access to universal childcare: Effects on childcare arrangements and maternal employment," LISER Working Paper Series 2019-11, Luxembourg Institute of Socio-Economic Research (LISER).
    8. Felfe, Christina & Lechner, Michael & Thiemann, Petra, 2016. "After-school care and parents' labor supply," Labour Economics, Elsevier, vol. 42(C), pages 64-75.
    9. Jasmin Thomas, 2024. "Free, full‐day programming for four‐year‐old children in Nova Scotia and women's labour market outcomes," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(2), pages 588-621, May.
    10. Daniela Vuri, 2016. "Do childcare policies increase maternal employment?," IZA World of Labor, Institute of Labor Economics (IZA), pages 241-241, March.
    11. Anna Lovász & Ágnes Szabó-Morvai, 2019. "Childcare availability and maternal labor supply in a setting of high potential impact," Empirical Economics, Springer, vol. 56(6), pages 2127-2165, June.
    12. Matthias Krapf & Anja Roth & Michaela Slotwinski, 2020. "The Effect of Childcare on Parental Earnings Trajectories," CESifo Working Paper Series 8764, CESifo.
    13. Marc Jourdain Muizon, 2020. "Subsidies for parental leave and formal childcare: be careful what you wish for," Review of Economics of the Household, Springer, vol. 18(3), pages 735-772, September.
    14. Martin Eckhoff Andresen & Tarjei Havnes, 2018. "Child care, parental labor supply and tax revenue," Discussion Papers 881, Statistics Norway, Research Department.
    15. Selina Gangl & Martin Huber, 2021. "From homemakers to breadwinners? How mandatory kindergarten affects maternal labour market outcomes," Papers 2111.14524, arXiv.org, revised Mar 2022.
    16. Christina Gathmann & Björn Sass, 2018. "Taxing Childcare: Effects on Childcare Choices, Family Labor Supply, and Children," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 665-709.
    17. Chiara Puccioni & Daniela Vuri, 2024. "With a Little Help from Nurseries. Childcare Services and Mothers’ Employment in Italy," CEIS Research Paper 588, Tor Vergata University, CEIS, revised 19 Dec 2024.
    18. Sarah Cattan, 2016. "Can universal preschool increase the labor supply of mothers?," IZA World of Labor, Institute of Labor Economics (IZA), pages 312-312, November.
    19. Pihl, Ariel Marek, 2022. "Head Start and mothers’ work: Free child care or something more?," Labour Economics, Elsevier, vol. 75(C).
    20. Ludovica Gambaro & Jan Marcus & Frauke Peter, 2019. "School entry, afternoon care, and mothers’ labour supply," Empirical Economics, Springer, vol. 57(3), pages 769-803, September.

    More about this item

    Keywords

    tax revenue; female labor supply; child care; instrumental variables;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp11576. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.